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Mortgage Rates Move Higher on a Strong Employment Report

A surprisingly strong October employment report sent 10 year bond yields up 15 basis points on Friday, which pushed 30 year conforming mortgage rates higher by 15 basis points. 30 year mortgage rates today are averaging 4.37 percent, an increase from last week's average 30 year mortgage rate of 4.21 percent.

See a List of Mortgage Rates Here: Mortgage Rates Today

The employment report showed over 204,000 jobs were created for October, much higher than the consensus of 100,000 jobs. The number of jobs created was a surprise considering the Federal government was shut down for the first 16 days of October and the fight to raise the debt limit raged on for the first half of the month.

Strong Job Growth Will Force the Federal Reserve to Taper

The jobs number wasn't the only thing that sent bond rates and mortgage rates sharply higher. A stronger economy and more robust job growth will make it more likely the Federal Reserve will start to taper their purchases of long term bonds and mortgage-backed securities.

The Fed's policies of buying these securities, known as quantitative easing (QE), is designed to force long term interest rates lower. The Fed has been successful at driving long term bond rates and mortgage rates down to record lows. At the end of October, analysts believed the Fed would continue their purchases well into 2014 but now it looks like the Fed might slow their purchases earlier.

Just the possibility of the Fed slowing down their purchasing is sending rates higher. We went through this same scenario over the summer when bond rates and mortgage rates shot up over 1.00 percent on the fears of the Fed slowing their current round of QE.

Where are Mortgage Rates Headed This Week?

Mortgage Rates Move Higher on a Strong Employment ReportWhich direction mortgage rates head this week will depend on economic data released during the week. No data will be released on Veterans Day and nothing is scheduled to be released tomorrow. The biggest rate movers this week, initial unemployment claims, industrial production, and capacity utilization are all scheduled to be released later during the week.

Initial claims will be released on Thursday and the market expects the number to be at 335,000. A number lower than that will send rates higher since it will add more credence to a stronger labor market. Industrial production and capacity utilization are scheduled to be released on Friday and a strong number on either of these will also send rates higher.

Weaker than expected numbers on any of these three won't really send rates much lower from current levels. The forecast on the high end for 30 year mortgage rates are at 4.60 percent and on the low end, 30 year rates could move down to 4.15 percent. The best 30 year refinance rates in our rate table today are at 3.75 percent with 2 mortgage points.

15 Year Mortgage Rates Today

Average 15 year mortgage rates today are up 13 basis points this week and are just under 3.50 percent. The current average 15 year mortgage rate is at 3.40 percent, up from the previous week's average 15 year mortgage rate of 3.27 percent. As with 30 year rates, the direction 15 year rates take this week will depend on where bond rates go.

Strong data and higher bond rates will send 15 year mortgage rates above 3.50 percent, probably as high as 3.65 percent. Weak numbers will send 15 year rates as low as 3.25 percent. Currently, the lowest 15 year refinance rates in our database are at 2.75 percent with 1.764 mortgage points.

Current Jumbo Mortgage Rates

Current mortgage rates on 30 year jumbo mortgage loans are averaging 4.49 percent, an increase from the prior week's average 30 year jumbo mortgage rate of 3.39 percent. The range for average jumbo mortgage rates this week will be between 4.30 percent on the low end and 4.65 percent on the high end.

While average rates fluctuate daily, the best jumbo rates available have remained consistent over the past several weeks. The best jumbo mortgage rates today in our database are still at 4.00 percent with points. The best jumbo rates without points are still below the average rate at 4.125 percent.

Today's mortgage rates on 15 year jumbo loans are averaging 3.80 percent, an increase over last week's average 15 year jumbo rate of 3.69 percent. The range for 15 year jumbo rates this week will be between 3.65 percent and 3.95 percent. The best 15 year jumbo refinancing rates in our database right now with points are at 3.125 percent, the best rate without points is at 3.50 percent.

Today's Adjustable Mortgage Rates

Average 5 year conforming adjustable mortgage rates are currently at 3.64 percent, a sharp increase over last week's average 5 year adjustable mortgage rate of 3.37 percent. For the coming week, 5 year adjustable mortgage rates could move as low as 3.45 percent or as high as 3.85 percent.

If you're in the market for an adjustable loan, the lowest 5 year adjustable rates available are more than 150 basis points below the average rate. The best 5 year adjustable rate in our database with points is at 2.125 percent and the lowest adjustable rate without points is at 2.49 percent, still over 100 basis points below the average.

5 year jumbo adjustable mortgage rates are averaging 2.87 percent, a slight increase from last week's average 5 year jumbo rate of 2.83 percent. This week 5 year jumbo rates on average will remain between 2.75 percent and 3.00 percent. The best jumbo rates today in our database are at 2.125 percent with just under 1 mortgage point. The best rate without points is at 2.49 percent.
Author: Brian McKay
November 11th, 2013